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This article was published on December 1, 2021

How on Earth is Elon Musk’s SpaceX facing bankruptcy?

Musk wants more rocket engines

How on Earth is Elon Musk’s SpaceX facing bankruptcy? Image by: SpaceX/AFSB (edited)
Thomas Macaulay
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Thomas Macaulay

Writer at Neural by TNW — Thomas covers AI in all its iterations. Likes Werner Herzog films and Arsenal FC. Writer at Neural by TNW — Thomas covers AI in all its iterations. Likes Werner Herzog films and Arsenal FC.

The richest person in the world is worried about money. Elon Musk, whose net worth is estimated at $310 billion, says his space company faces the threat of going bust.

In an email to SpaceX staff that was first obtained by Space Explored, Musk said the firm could go under due to issues producing Raptor rocket engines.

The Raptor engines power SpaceX’s Starship rockets, which the company hopes to take people to the moon and Mars. Musk told staff that a “Raptor production crisis” threatens the firm’s future:

The consequences for SpaceX if we can not get enough reliable Raptors made is that we then can’t fly Starship… What it comes down to, is that we face a genuine risk of bankruptcy if we can’t achieve a Starship flight rate of at least once every two weeks next year.

The Tesla tycoon later acknowledged the report on Twitter:

If a severe global recession were to dry up capital availability / liquidity while SpaceX was losing billions on Starlink & Starship, then bankruptcy, while still unlikely, is not impossible.

In a separate tweet, he confirmed that Raptor production problems were the biggest potential bottleneck for future Starship flights.

The dire warning may come as a surprise, given SpaceX’s apparent success.

The firm was recently valued at $100.3 billion, up from $74 billion in February. That makes it the second-most valuable private company in the world, according to CB Insights, behind only China’s Bytedance.

SpaceX has also continuously hit historic milestones, from becoming the first private company to successfully launch, orbit, and recover a spacecraft, to sending astronauts to the International Space Station.

However, Musk says the magnitude of the Starship program isn’t fully appreciated:

It is designed to extend life to Mars (and the moon), which requires ~1000 times more payload to orbit than all current Earth rockets combined.

Musk added that both General Motors and Chrysler — then America’s biggest and third-largest automakers, respectively — declared themselves bankrupt in the Great Recession of 2008–09.

Undoubtedly, Starship is a phenomenally ambitious — and expensive — project. Yet Musk’s fears of bankruptcy may not be all they seem.

The comments could also pressure staff to deliver on his ambitious plans. Indeed, his memo to staff — sent the day after Thanksgiving — urged them to return to work:

Unless you have critical family matters or cannot physically return to Hawthorne [Tesla’s headquarters], we will need all hands on deck to recover from what is, quite frankly, a disaster.

Whether the company is on the verge of bankruptcy or not, Musk’s message will likely have got some more labor out of his employees — and moved SpaceX closer to resolving his rocket issues.

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